It is kind of funny to keep hearing this guy who had traded PSEC 80 times without a loss kept warning others that this may be a black swan event. I could not understand his purpose because he would want PSEC to drop badly so he can continue to trade it. It is almost like a wolf to warn the chickens before he eats them. How funny. Now I am not saying that it is impossible because anything is possible in life. The earth can get hit by an asteroid and most of the earth will vaporize. You may win the 400M dollar lottery tomorrow and it will completely change your life (sometime for the worse). But not too many of us had predicted that the FED would delay their bond tapering in their last FOMC meeting on September, so many so called experts already predicted that the FED would start bond tapering or a taper-like bond reduction, whatever the heck that meant. The sad fact is NONE of us, including all these experts can predict the market and world events that will affect the market, none of us can otherwise most of us will become billionaires.
If the market tanks with PSEC tanking worse and you lose a bundle, then you really have nobody to blame but yourselves because you should realize the very basic fact of investing - the higher the yield of a stock usually means the higher the risk. If you cannot take the risk, why would you buy and hold a high risk high return stock?
Instead of buying PSEC, I bought COP for myself and for my friend whose ROTH IRA account I helped managed. We bought at the $60 price, and it reached its 12-mo HIGH at 71.18 on 10/7, these past two days the DOW dropped close to 300 points, COP closed today at 70.17, down only 1%. My friend asked me yesterday if we should sell it. I said NO because it is such a great oil stock and if it drops some more, we will just buy more.
my adjusted price in cop is $33 from 4 yrs ago, my sons is $50, my dads is $53 we have over 11k shares and it has been a great investment and I feel it is a better investment at todays price with the new events than it was 4 yrs ago. congrats capital appreciation is very key in this market. you might want to look at BAC for the next twelve months, well under book value.
There is no Black Swan event..... A Black Swan is an unexpected adverse event that appears, not planned by anyone. This debt ceiling showdown was planned, as did the fiscal cliff last December.
There is no default, because these same politicians will know they will be out of the job if that were to happen. Just like last December, they will posture until the very last hour deadline when they ALL would miraculously come into an unanimous agreement 2 AM in the morning.
It is all a game of chicken. The stock market selling off will recover everything that was lost during this theatrical performance. It is the time to get cheap shares....
For ppl who actually believe in this debt default stuff.....gimme a break, haven't we gone through this same scenario over and over for the past 20 years....and everytime they wind up raising the debt ceiling in the end.
Don't sell because you will not catch the rebound when it gets resolved. Many funds had been under-allocated in stocks all of this year and will need to show some performance by the end of the year. They will be buying as the market drop becomes more precipitous. With Yellen now as Fed Chair, QE will never end. All this talk about tapering is like all the talk they been giving about ending QE. The Fed can never let interest rates normalize above 3%. They will have to keep buying, because if they don't the economy will tank again.
The changed their tapering minds once they saw how quickly interest yields can spike from 1.4% to 3% in a matter of 3 months. The Fed will continue to be accommodative, even after Bernanke leaves.
A black swan event is any event the chances of which are considered infinitesimally small, yet happens anyway. It harkens to a debate over 2 centuries ago that touched upon theology and philosophy. Black swans were used as an example in the argument because they did not exist - according to European thought. That was, of course, until black swans were discovered and subsequently confirmed to be black swans, in India.
It proved to be a valuable lesson - that no matter how infinitesimally small a chance may be, it is still possible. And if given enough chances it becomes inevitable. Much like rolling craps 10 times in a row. The chances are infinitesimally small, but if you roll enough times, it will happen - guaranteed!
And we now know the world stock trade produces lots of chances for anything to happen.
You are a funny guy, so far my warnings have been correct with PSEC dropping from 11.40 to 10.80 so far or more than 5%. Tomorrow think the Yellen effect will stop the slide for a day............
So it is really simple, if you cannot take the heat, you should never invest in stocks because making money on stocks is really not as easy as most people thought. Most of stocks (about 75%) if you hold them for more than 20 years, you will lose money or simply break even. Many high-yield stocks, despite their high yields or because of their high yields (paying more dividends that they can afford), in the long term your total return will be below the market indexes or just break even. You would be much better off in just buying index funds such as SPY or IWM.
I really DO NOT believe the US government will default on Oct. 17 because while many of our politicians are selfish but they are not stupid. The more the two parties talked in public, the more you know they were just theatrics. One of the main reasons, according to some insiders, that the debt ceiling is not solved yet and may not be solved until the last day, is because donations kept coming in, for both parties. Nobody wants to cut off their money flows until the last minute. But look at all these big funds, they are not really worried. There were really not any large sell offs and I could hardly find any stocks that are CHEAP enough to buy for long term. Look at utilities (such as SO), most went up recently. Look at all these bond funds, they barely dropped. Why? If we are going to default, would people be so calm?
The main thing is I now believe the FED may not even taper bond buying this year and QE may very well continue till................ Now I am not saying the market will not tank badly because indeed any black swan events will trigger it. I will watch Europe especially Germany closely. Now Merkel had won her re-election, things will change for the worse in Europe. Guaranteed.
I believe the chance of having a relief rally as soon as the debt ceiling issue is solved (short term) is very high and you may only have a short time window to grab the stocks you really want.
Oh, forgot to mention, in the rare chance that the other guy who-is-actually-a-wolf-but-pretends-to-be-a-chicken is RIGHT and the debt ceiling does indeed become a black swan event, then I would be more than happy to remind ALL of you what I have been predicting numerous times previously:
"IT will drop below its previous 12-mo low of 9.80 by the end of this year."
You know what I meant by IT. When my prediction comes true, I will start buying IT, a lot of IT. I happened to buy tons of BKCC yesterday at 8.99 because for no reasons whatsoever it dropped more than 3% in a single day, resulted in a 11%+ yield. It rose to as high as 9.38 today and I sold them at 9.34. Probably should have kept them but I do not like the fact that their largest share holder, Virginia Retirement System, kept dumping BKCC shares in the open market, some time several times in a month.
You should only invest in things you know.